The megamerger between Bank of New York and Mellon Financial has led to the resignations of several key BNY Asset Management executives, none bigger than BNY’s top money management official, Steven Pisarkiewicz.
Mr. Pisarkiewicz’s departure in mid-May sends a clear signal that, while the Bank of New York was the acquirer in a deal driven largely by custody and asset servicing, Mellon executives are in the driver’s seat of the combined asset management business.
The deal will create a money management company with $1.1 trillion in assets — roughly 85% of which will come from Mellon, whose corporate offices are based in Pittsburgh.
Mr. Pisarkiewicz, former executive vice president and head of BNY Asset Management, last week rejoined AllianceBernstein Inc. He ran the New York-based firm’s structured equities business before leaving to take the top asset management spot at BNY in May 2003.
In his second stint with AllianceBernstein, Mr. Pisarkiewicz is now a national managing director in its global family office group. He declined to comment.
At BNY Asset Management, Mr. Pisarkiewicz oversaw the $179 billion money manager’s five boutique investment affiliates — which include hedge fund manager Ivy Asset Management Corp., structured products specialist Alcentra Group, and real estate manager Urdang Capital Management Inc. — as well as its internal fixed-income and equity teams.
But once the deal with Mellon is complete, the BNY units will be directly plugged into Mellon’s $930 billion boutique investment affiliate model, Ronald O’Hanley, president and chief executive officer of Mellon Asset Management, Boston, said in an interview.
Teams to be blended
Mr. O’Hanley said the BNY Asset Management internal equity and fixed-income teams will be blended into several of Mellon Asset Management’s 14 investment affiliates, which include Dreyfus Corp., Boston Company Asset Management LLC and Standish Mellon Asset Management.
Mr. O’Hanley will be president and CEO of the combined business, BNY Mellon Asset Management.
Mr. Pisarkiewicz was offered a “very senior role” within the combined company, said Mr. O’Hanley, but it would have required him to relocate to one of Mellon’s investment affiliates outside of New York.
“Some (turnover) is inevitable, even when there is a good role established,” Mr. O’Hanley said. “The reality is…you’re going to be a smaller fish in a bigger pond. Mergers are often times where people elect to rethink what they’re doing.”
Two other top BNY Asset Management officials also quit last month: Margo Cook, executive vice president, chief investment officer and head of institutional asset management; and James Barrett, managing director of institutional sales and marketing. Both joined Bear Stearns Asset Management as senior managing directors. Ms. Cook is head of BSAM’s institutional business; Mr. Barrett is head of global sales.
Mr. O’Hanley said both were offered positions within the combined BNY-Mellon business. “We didn’t want any of these three to leave,” he said. “But their roles were going to be different.”
He added that none of the three ran money for BNY Asset Management’s clients.
Other than the three management executives, Mr. O’Hanley said Mellon has retained all of BNY Asset Management’s key investment personnel, both at its five affiliates and within its internal equity and fixed-income businesses.
“The key investment people are still there and will continue to be there post-merger and for the foreseeable future,” he said.
But some industry observers said the departure of three key managers eventually might have an impact on BNY’s remaining investment staff.
‘More receptive’
“They are certainly more receptive to a phone call these days,” said Daniel Johnson, a New York-based managing director at investment recruiting firm Fiderion Group. He wouldn’t elaborate. He did say a disruption in management — specifically in the top executive post — coupled with a merger, could spur additional turnover.
But Mr. O’Hanley pointed out the BNY-Mellon merger would be “100% additive” to its investment platform, meaning that there are few, if any, redundancies between the two. As a result, he said, turnover and continuity for clients shouldn’t be an issue.
“Their strengths are remarkably complementary,” said Richard Holbein, president of Holbein Associates Inc., Dallas, an investment consultant who has several institutional clients that use Mellon for various services. “As far as we have seen, it has been business as usual.”
Future turnover?
If future turnover arises among investment professionals because of the merger, that would be more cause for concern to institutional investors, said Christopher Fide, investment consultant at Mangham Associates Inc., Charlottesville, Va. “When a firm loses its top executive, it’s still a red flag,” he said. “But the most critical people to keep in a merger are the people who are actually managing client money.”
Officials at Bank of New York and Mellon have said the deal is expected to close early in the third quarter; sources close to the deal, however, said the transaction is ahead of schedule and could close at the end of this month.
